A bench of Justices Surya Kant and Ujjal Bhuyan found no error in the High Court’s judgment and its directions in restraining the imposition and collection of tolls, as NTBCL (Noida Toll Bridge Company Ltd) had recovered the costs of the project and substantial profits.

 

"No person or entity can be allowed to make an undue and unjust profit from public property, at the cost of the public at large," the bench said.

 

The court said that NOIDA exceeded its authority by delegating the power to levy fees or impose tolls to NTBCL, rendering such delegation invalid. It held that Article 14 of the Concession Agreement, read with the formula in Annexure F, contravened public policy and was, therefore, liable to be severed from the Agreement.

 

The bench held that contracts loaded with terms which were so unfair and unreasonable, that they truly baffled it, were undoubtedly opposed to public policy and had to be adjudged void.

 

"We thus hold that NOIDA did not have any competence to delegate the power to levy fees and toll to NTBCL, and thereby overstepped its statutory bounds," the court said, finding NTBCL and NOIDA had indulged in trickery and placed the cart before the horse, in attempting to authorise actions post facto, thereby obscuring the full extent of misuse of power.

 

Referring to Section 6A of the Uttar Pradesh Industrial Area Development Act, 1976, the bench said the 'Authority’ was empowered to delegate the power to collect taxes or fees levied by it. However, under no circumstances does it authorize the delegation of the power to levy taxes or fees, it said.

 

An authority vested with the power to frame subordinate legislation must act within the bounds of that power and refrain from exceeding its limits, the court said, adding that the power to delegate must be expressly discernible in the Principal Act itself and in the absence of such provisions, no circular method can be countenanced to extract such power.

 

Relying upon the CAG Report, the court noted that the annual toll income of NTBCL during 2001-2016 was Rupees 892.51 crores.

 

"NTBCL has been making profits for the last 11 years; has no accumulated losses as of 31.03.2016; has paid dividends of Rupees 243.07 crores till 31.03.2016 to its shareholders; and repaid all its debt with interest. NTBCL had thus, by 31.03.2016, recovered the project costs, the maintenance costs, and a significant profit on its initial investment. There is no rhyme or reason for the collection of user fees/tolls to continue," the bench said.

 

The court noted that the CAG Report highlighted the extent to which the public had been defrauded.

 

"The general public has been forced to part with hundreds of crores by IL&FS and NTBCL, under the guise of providing necessary public infrastructure. This could not have been done but for the collusion of the then officers of the two State Governments and of NOIDA, who closed their eyes while the contractual obligations were incurred," the bench said.

 

The court felt the High Court had rightly entertained the writ petition filed by the Federation of Noida Residents Welfare Association and others. "The contract awarded to NTBCL through the Concession Agreement by State authorities and NOIDA was unfair, unjust and inconsistent with Constitutional norms," the bench said.

 

The court also said that had respondent no 1 federation not been vigilant of their rights, the public funds would have continued to be misappropriated for private profiteering.

 

"Furthermore, the role played by IL&FS in this entire scheme is highly questionable. We say nothing except that the facts speak for themselves," it said.

 

Appellant NTBCL contended that the writ petition before the High Court was filed in 2012 with inordinate delay as the flyway was operational since 2001 in terms of agreements executed in 1992 and 1997.

 

The court, however, termed the plea as "wholly misconceived" and "misdirected", holding there was no fixed period of limitation for invoking jurisdiction under Article 226 and that each case had to be considered on its own facts and circumstance.

 

"There is no absolute bar on the maintainability of writ petitions, even in matters concerning contracts or monetary claims," the bench said.

 

The court said the continued levy of tolls and the concession agreement were directly impacting the rights and interests of commuters.

 

NTBCL’s attempts to classify the concession agreement as a purely private contractual matter, sequestered from such scrutiny, thus holds no ground. The Project, having been developed for public benefit, cannot escape judicial oversight, particularly when the allegations pertain to the public’s rights and interests, which are being infringed upon by the levying of user fees, it said.

 

The court also noted that the concession agreement for the development of the DND Flyway, entered into between NOIDA, IL&FS and NTBCL, was conspicuously silent regarding the issuance of any tender or inviting bids from other competitors.

 

"The golden principle thus is that Government procedures or policies pioneered in public interest must genuinely serve the public and not merely enrich private entities. When public interest is overshadowed, it does raise concerns as to whether the Government has acted in a manner that appears capricious or arbitrary. It then becomes imperative for the Court to scrutinise whether such actions vitiate the Constitutional mandate of equality. Such procedures, must therefore satisfy the litmus test of due application of mind, fairness, transparency and most pertinently, being bona fide," the bench said.

 

Examining the reasonableness of the formula adopted in the agreement, the bench said that the method used to calculate the Total Project Cost was fundamentally a mechanism for unjust enrichment by a select few and, as such was rightly deemed to be inherently arbitrary by the High Court.

 

"Accordingly, we have no hesitation to hold that the formula outlined in Annexure F of the Concession Agreement is unreasonable and contravenes Article 14 of the Constitution," the bench said.

 

In damning observations, the court found serious impropriety not only by IL&FS and NTBCL but also by the then officers of NOIDA, the State of UP, and the NCT of Delhi.

 

The court said it was inconceivable that multiple layers of government, advised by some of the most astute financial minds, failed to foresee that this formula would impose an undue and unfair burden on the users, the general public.

 

"Such an outcome could only arise through extraneous considerations influencing several stakeholders. This blatant misuse of power and breach of public trust has profoundly shocked the conscience of this Court. The manner in which some senior bureaucrats manipulated the siphoning of project funds for their personal gains clearly make out a fit case for investigation under the Prevention of Corruption Act, 1988, although the ship might have sailed for such action at this stage," the bench said.

 

Given the extent of manipulation in the instant case, the bench intervened in the matter to hold that Article 14 of the Concession Agreement, read with the formula in Annexure F, was opposed to public policy and must be cut apart from the Concession Agreement.

 

The court also opined when the state engages in public work, it must be free of arbitrariness.

 

Operational since 2001, the DND flyway drastically reduced traffic congestion and travel time between Delhi and Noida stretch of 9.2 km. The commuters were charged Rs 28 for a one-way trip or Rs 56 for a round trip on the expressway.